RE Finance Final

Question 1

Dividend Growth Rate (REIT)

Answer 1

r (return on equity) x b (retention ratio)

r = 15% b = 30% = .15 * .3 = .045

Question 2

P/E Ratio (REIT)

Answer 2

(1 - b) / (k - b*r)

(1 - retention ratio) / [required return - (retention ratio * return on equity)]

Question 3

REIT nomenclature: b, k, r

Answer 3

b = plowback or retention ratio
k = required return
r = return on equity